How to Get the Price Right: Personalize It

Every holiday season retailers examine their marketing capabilities and sales trends to improve how they market their products and connect to customers.

Some sectors have excelled in innovation by methodically adopting a new approach.

If your business is evaluating ways to improve, consider pricing tactics among grocery retailers. Many have found the right ways to personalize customer experience and retain customers in the midst of fierce competition.

Specially Tailored Pricing

Personalized pricing is the automated notification or display of offers to specific customers based on their shopping histories.

The shopping patterns are identified via analytical solutions. The programs are meant to deepen customer relationships by providing just in time, relevant offers.

The trend has been gaining interest over the past few years, especially among grocers.

Back in 2012 Chain Store Age heralded the profitability Safeway gained from its Just For U loyalty program. Just For U members were given coupons tailored to their shopping patterns. (An aside: another grocery retailer, Albertsons, has since acquired Safeway.)

For grocers in particular, personalized pricing is a breakthrough in managing revenue. The grocery industry relies on volume sales of consumer goods that typically carry a low contribution margin. Encouraging large purchases per customer helps to keep the cash flowing.

This is especially valuable in the face of fierce rivals such as Walmart, noted for its decision to offer groceries at its retail stores.

In January 2014, for example, the Star Tribune reported Target had increased same-store sales by 3.1 percent. The chain attributed the increase to its price-matching policy on food and health products. Because of the success, Target decided to extend its policy.

Tapping Mobile Customers

Personalized pricing is a gateway for meaningful customer activity on a mobile device.

For example, eMarketer notes that loyalty programs are the most popular mobile campaigns. So even simple reminders and notifications can drive customer interest and increase retail branding.

The use of mobile devices in personalization strategies creates a clear association of shopping behavior to data that a retailer can reliably apply to its predictive analytics efforts.

Predicting Success

Personalized pricing is a predictive model, and predictive model quality requires an exactness of input data sources. This accuracy can identify valuable correlations.

Gaining attention on mobile devices is already highly competitive. MarketingLand noted a Forrester study that indicated customers spend the majority of their time using a few apps. Specifically, mobile users spend 80 percent of their time on their smartphones on just five apps.

Thus persuading customers to use another tool requires a clear purpose and explanation of how it saves the customers money.

Ultimately personalized pricing has become revered because it can prevent retailers from being entirely dependent on discounts to generate sales among price-conscious customers.

With a solid advanced analytics program in place, retailers can provide a personal touch to their customers’ experience.